Employers Beware: You are Giving Up All of Your Health Care Control!

Tuesday, July 12, 2016

By Stan Schwartz MDCEO, WellOK, The Northeastern Oklahoma Business Coalition on Health

Employers and benefits designers are being played. There are alternative health care delivery options out there that will increase your employee satisfaction and save your company money at the same time. It’s a diversion from the traditional method of working with health providers and insurance companies, but well worth the (minimal!) effort.

It’s no secret that the costs of health care continue to skyrocket for both employers and employees. What if there were a way to increase the quality of your employees’ health benefits while greatly reducing your company’s overall health care spend? Yes, it’s possible. And it’s easier than you may think.

Many companies work with benefits brokers – but those brokers may be incentivized by the insurance companies to promote certain plans, services and prescription types. So the benefits consultant you use could be looking out for their own best interests before that of your employees. And partial self-pay plans that benefit you may not provide them with any commissions.

Now think about your current group of covered lives. Regardless of the type of health plan you subscribe to, there are some general truths about employee populations. For example, in a company with 1,000 employees, it is safe to assume that 15% or so (150+) will need a CT scan or MRI over the course of a given year. Around a half (500+) will require laboratory services of some sort. A dozen or so are likely to have colonoscopies. And so on.

There are certain services and procedures that are bound to show up time and time again in your population of covered lives. The only real unknown is who will need the services. When you know you are going to buy services, why jam the payment through an insurance mechanism originally intended to pay for the unexpected?

The prices for common, repeated services are all over the board. I’ve literally seen lab charges for a common blood chemistry test for as little as $7 and as much as $300 – for the SAME LAB TEST, when obtained through a PPO contract. That contract may guarantee you a certain discount but that may be a discount off an outrageously high list price.

What I – and many forward thinking leaders in the health care realm are advocating for today – are what we call “transparent markets.” This model takes advantage of available cash prices by making your members walk and talk like cash payers.

Providers are eager for low-friction cash payments (with no collection expenses and no A/R to service). The low prices produce enough savings to allow the employer to cover all out of pocket employee costs and still save money. On the human side, the employer now provides an incredible benefit to employees (not to mention a much better overall health care experience for the employees). How often do you get the opportunity to add a benefit that saves you money?

Here’s an example of a transparent market at work. One Oklahoma-based manufacturer that we’ve worked with has 200 employees and 420 covered lives. We conducted a study showing that this company paid $242,805 more over the course of 15 months on a traditional insurance model versus same services under a direct cash model (with The Zero Card, one of several transparent market enablers out there). Over that 15 months alone, this employer could have saved $242,805 by moving to a predominantly self-pay model, slashing their 15-month spend for these services from $344,611 to $101,806.

Not all services are amenable to a cash-equivalent model. But almost any service that can be scheduled in advanced is a candidate. The underlying PPO health plan is still there for accidents, acute illnesses like pneumonia and so forth.

But what about quality? Going transparent doesn’t mean a degradation of quality. As a matter of fact, in this example, three of the four top rated hospitals in Oklahoma (as ranked by HealthInsight) were Zero Card providers and understood well the benefits of being part of a transparent market.

To make things even more interesting, let’s say you decide to adopt the transparent model of health care at your company. Did you also know that, if combined with the introduction of onsite direct primary care, many employees would have ZERO out of pocket expense each year? All this while the employer continues to save money.

With a transparent health care model, everybody wins. Employers get up front pricing and realize instant savings. Employees and their families get the care they need for $0. Doctors get to be doctors and aren’t hurried through 15-minute appointments as mandated by their health insurance companies. Everyone wins.

The key to maximizing your company savings, while increasing employee satisfaction and health care quality, is to identify and work with a health care consultant that is not incentivized by any insurance company, and has the experience and foresight to identify alternative payment models. Many of these organizations are non-profits – like your state or regional business coalition on health. There are other existing businesses out there that specialize in enabling the transparent model for companies – examples include The Zero Card, Provider Partners and Carrum.

Forbes Magazine ran an article showing the remarkable benefit that a transparent market brought to a medium-sized manufacturer in Tulsa, OK.

Transparency doesn’t come naturally to a health care provider – you have to clear the window yourself .

Self-funded employers have so much more control than they think. Companies have to explore alternative health care payment models in order to flex this control – and they have to have the buy-in of their C-suite executives.

Health insurance was really designed to deal with unpredictable health care issues. These are few and far between, but a general PPO health insurance plan will cover them. For the majority of the health issues issues however – those predictable services and preventative visits we discuss above, low, cash-based fees may be readily available. And the cost savings could be astronomical.